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July 17, 2013

Schwab, Fidelity Donor-Advised Funds Report Strong Results

Fidelity hits record for both outgoing grants and incoming donations

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Donors are taking advantage of higher market performance to grant appreciated assets, such as stocks and mutual funds, to charitable donor-advised funds.

Both Fidelity and Schwab reported Wednesday that the number of outgoing grants and incoming donations increased significantly in the first half of 2013, with Fidelity in particular experiencing all-time highs for both measures of donor activity.

Donors recommended more than 214,000 grants totaling $919 million, a 33% increase in dollars granted over the same period last year, and contributed $879 million to their charitable accounts, a 7% increase. Additionally, the 1,640 new charitable accounts established represent a 43% increase over the first half of 2012.

The Boston-based company futher noted that grants made to nonprofit organizations of $1 million or more were up 50% over the same period the previous year. The uptick in the number of large outgoing grants helped boost the average grants size for the first half to $4,285, a 10% increase.

“We saw 43% of donations come from securities, and 5% come from non-publically traded stock,” said Kim Gagliardi, senior manager of public relations for Fidelity Charitable. “What sets us apart is our complex assets division. We have lawyers on staff to help business owners and senior executives with company stock make donations without having to first liquidate.”

Schwab Charitable reported assets under management of $4.8 billion and grants to charities for the fiscal year, ending June 30, totaled more than $600 million, 55% and 12% growth from the previous year, respectively. The organization also doubled its new accounts in fiscal year 2013, underscoring what it says is the “popularity of donor-advised funds as part of holistic financial and charitable planning.”

According to the San Francisco-based firm’s 2013 RIA Benchmarking Study, released last week, 54% of all firms with AUM of $25 million or more currently offer charitable planning services, and of those, 85% indicated that at least some of their clients are using those services. Furthermore, 34% are considering offering charitable planning in the future. For those firms with AUM between $50 million and $100 million, 50% are considering offering charitable planning in the next 12 to 18 months.

"For the entire fiscal year, 62% of the donations were made with appreciated securities," said Kim Laughton, president of Schwab Charitable. "The rest, 38%, came from cash.”

Laughton also noted the firm has a separate department dedicated to assisting with complex assets (usually private stock), including positions in LLCs, private equity and hedge funds.